Study shows savings from simplified IT strategies

26 July 2011

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26 July 2011 | Adam Leach

Simplifying and standardising IT services could save businesses up to 40 per cent on their overall IT costs, a report claims.

According to A Clean Slate, published this month by Compass Management Consulting, if companies adopt modern IT strategies, such as cloud computing, they can pay for the amount of IT services they actually use, as opposed to the amount they think they might need.

Steve Tuppen, UK president at Compass Management Consulting, said: “Many buyers of IT services are consistently over-estimating the unique level of their IT requirements. This leads to over-specified and over-configured IT infrastructure, which costs 40 per cent or more than the equivalent bundle of standard services.” This figure has been drawn from benchmarking work carried out by the organisation.

He argues that by over-specifying IT requirements in tenders, companies are limiting the ability of service providers to make savings by combining the buying power of all their clients to purchase standard services.

Tuppen admits all clients need an element of customisation, but feels this accounts for just 10 per cent of the overall contract, leaving the potential for the majority of services to be standardised. “For those able to manage the transition to standard services, the prize is a step change reduction in costs of 40 per cent or more.”

The report also explains that new technology has enabled IT contractors to charge through a utility-based model - where customers pay a rate per CPU (computer processing unit) minute. This compares with the more traditional model where companies paid per server, regardless of how much of the server was being used.

But, as previously reported in SM, there are a number of potential risks associated with moving to cloud computing. Victoria Rolton, associate, commercial at law firm Stevens and Bolton, advised examining both the “level of reliance placed on the provider” and the “level of service that can be guaranteed”.

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